The net loss narrowed to $132 million, or $1.25 a share,
from $146 million, or $1.37 a share, a year earlier, the Hoffman
Estates, Illinois-based company said today in a statement. Sales
fell 6.6 percent to $9.47 billion.

Chief Executive Officer Lou D’Ambrosio has been working to
keep the retailer’s inventory in line with customer demand, with
domestic levels decreasing by $512 million from the year-earlier
period. The lower cost of sales in the quarter helped Sears’s
gross margin widen to 26.7 percent of sales from 25.7 percent a
year earlier.

“They clearly have a lot of issues that need to be
addressed; they’re beginning to address them,” Matt McGinley, a
managing director at International Strategy and Investment Group
in New York, said today in a telephone interview. His firm
recommends selling the shares.

Sears has added in-store wireless service, equipped its
sales force with iPads and promoted customer-loyalty programs as
the retailer works to reverse five straight years of sales
declines. Comparable-store sales once again declined, by 2.9
percent at U.S. Sears stores and by 4.7 percent at Kmart, hurt
by lower electronics prices and declining sales of lawn and
garden equipment during the drought.

Targeted Promotions

Sears is working to gain shoppers by offering promotions
tied to its credit-card and layaway programs, and by adding
features such as mobile checkout, Chief Financial Officer Rob
Schriesheim said today in a telephone interview.

Sears rose 6.5 percent to $60.29 at the close in New York.
The shares have gained 90 percent this year.

In February, Sears announced the plans to spin off its
smaller-format Hometown, Hardware and and Outlet stores after
posting a $2.4 billion fourth-quarter loss, its largest
quarterly loss in at least nine years.

Sears is spinning off about 1,238 stores to generate cash,
potentially raising $346.5 million. Sears Hometown also plans to
pay a $100 million cash dividend to Sears Holding.

In May, the retailer said it planned a partial spinoff of
its Canadian stores that would reduce its stake to 51 percent
from 95 percent. Sears Canada yesterday said its second-quarter
loss widened to C$9.8 million ($9.9 million) amid increased
competition from U.S.-based retailers. Sales fell 8.5 percent to
C$1.05 billion.

Asset Sales

Executives have said they’d consider more asset sales.
D’Ambrosio told shareholders at the company’s annual meeting in
May that selling its Lands’ End clothing brand wouldn’t be
difficult.

“We have nothing imminent planned for Lands’ End,”
Schriesheim said.

While the moves stem immediate liquidity concerns, the
retailer’s future still is uncertain, McGinley said.

“Am I going to bet on this as a business over the long
run? No,” he said. “Are they making progress versus the
disasters that they were having over the past year? Yeah,
they’re making a little bit of progress.”